THE House of Representatives is expected to come up with a tax reform measure in harmony with the proposal of the Department of Finance which came under fire over its supposedly regressive features, according to the chamber’s top tax reform advocate.
“Hopefully, this week we can already produce the final version of the comprehensive tax reform package,” said Quirino Rep. Dakila Cua, chairman of the House committee on ways and means.
Cua said the DoF has agreed to revise many provisions in its tax reform measure, including, among others, the retention of value added tax exemptions for senior citizens.
“We have already agreed on 60 percent to 70 percent of the provisions. The contentious provisions of the bill are not that many. We are just trying to find right schemes to broaden the support to the bill and hasten its passage in the Congress,” Cua added.
The proposal to impose excise tax on petroleum, removal of VAT exemptions for senior citizens and person with disabilities and ad valorem tax on automobiles are some of the measures being pushed by the DoF to cover the estimated P159 billion in foregone revenues.
Cua said the Finance department is amenable to retaining VAT exemptions for senior citizens. “They realize the P6 billion [revenue from the removal of VAT] is not going to make a dent in our revenue generation,” he said.
Cua said the lower house is also proposing the inclusion of “collection efficiency measures” in the government’s tax reform package.
“One of the tax-collection efficiency measures we are proposing is the improvement of our point-of-sale system. We want large retail establishments to directly connected to the revenue-collection agencies to address loopholes in the tax administration,” Cua said.
However, Cua said no final decision has yet been reached on the adjustment of personal income tax brackets.
“They [DoF officials] still studying if it’s possible to exempt from personal income tax workers earning P25,000 monthly,” Cua added.
Lawmakers are in support to President Rodrigo Duterete’s advocacy to exempt workers earning P25,000 monthly, or P300,000 annually, and below from PIT.
But the DoF has only proposed to exempt workers with a monthly salary of P20,833, or P250,000 annually.
Under the current setup, workers earning P10,000 or less per month pay a five-percent income tax, while those with yearly earnings of P500,000 and above pay a 32-percent income tax.
